New mine norms to open $2 bn tap

The country expects to attract as much as $2 billion of foreign direct investment (FDI) annually in metals and minerals sector after the government overhauls a 50-year-old mining law, said Minister of State for Mines T Subbarami.

A panel of ministers will meet on July 6 to discuss the new policy, which may be approved by the Parliament in the monsoon session scheduled to begin next month, Reddy said today in New Delhi.

Delays in securing mining licences and land have undermined the country's efforts to win more investments, leaving the South Asian country short of the raw materials required for an economy that expanded 9.2 per cent last year, the most in almost two decades.

"If all the obstacles are taken care off, we could invest up to $1 billion in a period of five years,'' said Christopher Rashleigh, director of Indo Gold, in an interview today in New Delhi. The Australian mining company has applied for rights to explore gold and copper in Rajasthan.

The government wants to simplify procedures and reduce delays that have dissuaded mining companies from investing in the country, which according to McKinsey & Co has the world's fourth largest bauxite deposit, and the fifth-largest of iron ore reserve.

Posco, Asia's third-biggest steelmaker, has faced delays in getting rights to mine iron ore for its 12 million tonnes-a-year plant. Construction work on the plant will start in October, six months later than planned, because of the hold up, the company said on May 15.

The Central government and the ministry of mines have asked the Orissa government to hasten the process, Reddy told reporters today.